{"id":326,"date":"2015-11-29T11:10:10","date_gmt":"2015-11-29T16:10:10","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/fastenal-focusing-on-nuts-and-bolts\/"},"modified":"2015-12-09T18:47:21","modified_gmt":"2015-12-09T23:47:21","slug":"fastenal-focusing-on-nuts-and-bolts","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/fastenal-focusing-on-nuts-and-bolts\/","title":{"rendered":"Fastenal: Focusing on Nuts and Bolts"},"content":{"rendered":"<p style=\"text-align: center\"><span style=\"text-decoration: underline\"><strong>Company Overview<\/strong><\/span><\/p>\n<p>Fastenal (NASDAQ: FAST), founded in 1967 and incorporated in 1968, is a wholesaler and distributor that sells industrial and construction supplies to end-users. \u00a0The company&#8217;s offerings fall into two categories: threaded fasteners, such as nuts and bolts, and miscellaneous supplies and hardware. \u00a0The company operates over 2,600 stores and 14 distribution centers across 50 states and 20 countries. [1] \u00a0From 1987-2012, Fastenal was the highest-performing stock in the Russell 1000 index, growing 38,565 percent (not including dividends), and outgaining stalwarts such as Microsoft and Apple. [2]<\/p>\n<p style=\"text-align: center\"><span style=\"text-decoration: underline\"><strong>Business Model<\/strong><\/span><\/p>\n<p>Fastenal began as a modest, 1,000 square foot shop in Winona, MN. \u00a0Over time, the company found its niche and competitive advantage &#8211; an obsessive customer focus that would keep its customers coming back. \u00a0This approach was later distilled in founder Bob\u00a0Kierlin&#8217;s ethos &#8220;Growth Through Customer Service.&#8221; [3]<\/p>\n<p><iframe loading=\"lazy\" title=\"Fastenal History\" width=\"640\" height=\"360\" src=\"https:\/\/www.youtube.com\/embed\/AMbzeSrMfc4?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe> Source: [3]<\/p>\n<p>&nbsp;<\/p>\n<p>This model, underpinned by opening stores as close to the customer as possible, staffing them with great people, and exceeding customers&#8217; expectations, has guided the company as they&#8217;ve grown from a small regional supplier to a dynamic, high-growth wholesaler and distributor.<\/p>\n<p style=\"text-align: center\"><span style=\"text-decoration: underline\"><strong>Operating Model<\/strong><\/span><\/p>\n<blockquote>\n<p style=\"text-align: center\"><strong><em>\u201cWhat sets us apart is our locality to the customers,\u201d says Cory Jansen, executive vice president of operations for Fastenal. \u201cWe open local stores and service local customers with local expertise. At the same time, we\u2019re a national company with nat\u00adional buying power that happens to operate in a local fashion.\u201d [4]<\/em><\/strong><\/p>\n<\/blockquote>\n<p>Fastenal&#8217;s business model is supported in large part by an operating model focused on three things:<\/p>\n<ol>\n<li><em><strong>Decentralized Structure.<\/strong><\/em> \u00a0Fastenal places a premium on ensuring its stores, products, and people are embedded in the communities they serve. \u00a0Employees are empowered to take a flexible approach to serving customers &#8211; from creative sourcing of products to making emergency deliveries. \u00a0In fact, store managers are encouraged to do their own purchasing and set their own pricing based on local market needs. [5] \u00a0This principle of &#8220;local product and local people&#8221; ensures that the right product is on the shelf and\u00a0employees are well equipped to meet customers&#8217; needs. [6] \u00a0Further, the combination of a wide array of products, and a technically\n<figure style=\"width: 526px\" class=\"wp-caption alignright\"><img loading=\"lazy\" decoding=\"async\" class=\"\" src=\"http:\/\/www.nppgov.com\/wp-content\/uploads\/fastenal_banner-600x300-1.jpg\" alt=\"\" width=\"526\" height=\"263\" \/><figcaption class=\"wp-caption-text\">Source: http:\/\/www.nppgov.com\/wp-content\/uploads\/fastenal_banner-600&#215;300-1.jpg<\/figcaption><\/figure>\n<p>savvy and ultra-responsive workforce, leads to unprecedented entrepreneurial empowerment that is a natural extension of the company&#8217;s emphasis on a decentralized organizational structure.\u00a0[5]<\/li>\n<li><em><strong>Scale.<\/strong> <\/em>\u00a0While Fastenal has the look and feel of a local business, its operations are backed up by massive scale. \u00a0This is evident in the company&#8217;s robust\u00a0sourcing,\u00a0quality, and logistics programs. \u00a0 Through relationships with\u00a0thousands of supplier-partners and a massive distribution network, Fastenal can ensure customers receive quality parts locally and at low prices. \u00a0Additionally, because of Fastenal&#8217;s scale, the customer can enjoy\u00a0significant vendor consolidation opportunities and rapid (often same-day) product solutions. [7]<\/li>\n<li><em><strong>Vertically-Integrated Supply Chain.<\/strong><\/em> \u00a0Compounding Fastener&#8217;s myriad competitive advantages is the vertical integration of its supply chain. \u00a0The company owns manufacturing facilities, a 6,000-vehicle transportation fleet, 14 distribution centers, inventory supply systems, and retailing and sales service facilities. [8] \u00a0A cadre of supply chain professionals monitor retail inventory levels hourly to ensure product availability and can dispatch delivery trucks at a moment&#8217;s notice to any of the 2,600 retail locations. [9] \u00a0All this adds up to a steady flow of material from the factory to the retail site.<\/li>\n<\/ol>\n<p><a href=\"https:\/\/youtu.be\/-kRvQDdX_cw\">https:\/\/youtu.be\/-kRvQDdX_cw<\/a> Source: [9]<\/p>\n<p style=\"text-align: center\"><span style=\"text-decoration: underline\"><strong>Conclusion<\/strong><\/span><\/p>\n<p>Fastenal has performed remarkably well in building an\u00a0operating model based on decentralization, scale, and a vertically-integrated supply chain, among other things. \u00a0Further, each of these areas is tightly aligned with\u00a0Bob\u00a0Kierlin&#8217;s &#8220;Growth Through Customer Service&#8221; business model. \u00a0Not surprisingly, the operating model traits are difficult to emulate and act as formidable barriers to entry for new competitors. \u00a0Clearly, Fastenal&#8217;s tight\u00a0alignment between business and operational models is driving strong performance.<\/p>\n<p>&nbsp;<\/p>\n<p><em><strong>Sources<\/strong><\/em><\/p>\n<p>[1] http:\/\/www.reuters.com\/finance\/stocks\/companyProfile?symbol=FAST.O#K34eukE3eUFHo9Vj.97<\/p>\n<p>[2] http:\/\/www.bloomberg.com\/bw\/articles\/2012-02-23\/fastenals-runaway-stock-success<\/p>\n<p>[3]\u00a0https:\/\/www.fastenal.com\/en\/99\/our-history<\/p>\n<p>[4]\u00a0http:\/\/manufacturing-today.com\/index.php\/featured-content\/230-fastenal<\/p>\n<p>[5]\u00a0http:\/\/investor.fastenal.com\/releasedetail.cfm?ReleaseID=840693<\/p>\n<p>[6]\u00a0https:\/\/www.fastenal.com\/en\/94\/company-overview<\/p>\n<p>[7]\u00a0https:\/\/www.fastenal.com\/en\/210\/key-competitive-advantages<\/p>\n<p>[8]\u00a0http:\/\/www.forbes.com\/sites\/panosmourdoukoutas\/2013\/04\/10\/how-fastenal-wins\/<\/p>\n<p>[9]\u00a0https:\/\/www.fastenal.com\/en\/211\/distribution-overview<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>What&#039;s behind the success of a 48-year old wholesaler and distributor of nuts and bolts?  Their secret lies in the execution of a customer-focused business model.<\/p>\n","protected":false},"author":808,"featured_media":327,"comment_status":"open","ping_status":"closed","template":"","categories":[872,83,848,7],"class_list":["post-326","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-customerfocused","category-fastenal","category-nutsandbolts","category-winner"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/the-tom-challenge-tom-winners-and-losers-assignment\/","yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Fastenal: Focusing on Nuts and Bolts - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/fastenal-focusing-on-nuts-and-bolts\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Fastenal: Focusing on Nuts and Bolts - Technology and Operations Management\" \/>\n<meta property=\"og:description\" content=\"What&#039;s behind the success of a 48-year old wholesaler and distributor of nuts and bolts? 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